Technology

The Google Chromecast was a revolutionary device that turned any TV or monitor into a smart device. However, with TVs now including better and smarter software, is there still a market for the Chromecast?

The first thing to consider is, what exactly is a Chromecast. Well, the Chromecast was designed to revolutionise in home streaming by allowing the ability to wirelessly stream from your phone, desktop or laptop. The $35 dongle turned your TV into a media center with direct streaming from Youtube, Hulu, Netflix and many more region specific services. Four years since the initial release, 3 iterations have emerged, being the Chromecast 2, Chromecast Ultra and Chromecast Audio. Essentially, you would plug your Chromecast into your TV and connect it to power through the micro USB port. Many TVs have extra USB ports for external hard drives and they all provide enough power for this device. Once it’s turned on, it is very straightforward to connect to your phone and your home wifi.

The original Chromecast supported up to 1080p streaming and handled it reasonably well, however, streaming from a tab often ended up in audio lag with video sync issues. The newer versions have better wifi connectivity meaning lower lag spikes and a better all round experience of the device. However, many new smart TVs have greater software which has surpassed the capabilities of the Chromecast. Samsung TVs allow casting from Samsung devices and can even stream what’s on TV to the device, which you may find really handy when moving around the house. LG and other brands have incorporated similar technologies to allow users to have a better overall experience. Not only this, devices such as your PS4, XBOX ONE, Roku (Telstra TV) and now DVD players have included streaming capabilities to access Spotify, YouTube, Netflix and other video streaming services.

If all these devices can do what the Chromecast can, and do it BETTER, then why are they still around? Well, these devices were initially intended to bridge the gap between ordinary TVs and smart TVs, but now that most TVs have received upgrades in software in internal hardware, the Chromecast has branched off, expanding its capabilities to make it one of the most useful devices for its price.

With the Chromecast, you are able to stream from a VR headset to the TV, allowing other users to see what the VR user is viewing and doing. This can be problematic for those who enjoy a different kind of VR experience. The Chromecast can also support presentations, eliminating the need for any cables between the laptop or phone to the presentation device. Just plug in the Chromecast and start presenting! Not only this, the newer Chromecasts allow users to play certain games on the big screen, which is good for the family. Just don’t expect to play high graphic games on the device. Furthermore, though not available for every TV, the Chromecast allows your phone to function as a TV remote.

The Chromecast is a very capable device, but the rest of the competition are catching up. Google has been fighting hard to keep up the sales and usage of Chromecast with huge incentives and offers. These offers have been free subscriptions to their services, free movie streaming and Google credit to use on the Play Store. Thus, the Chromecast is very much alive despite being out of sight. For only around 30-40 bucks for the newer versions, it’s a good investment for its functionality. Though I must say, it may only be a matter of time before there is even better competition in the wireless casting market.

IP addresses are how all our internet connected devices communicate with each other with great synergy, without these addresses your devices cannot communicate. IP addresses are important for both inside and beyond the firewall.

Each Internet connected device has an unique address on the Internet, which can be used to send things to it. This is what we refer to as the IP address. There are actually two IP versions in use on the Internet today, which coexist but vary in the form of the addresses:

Internet Protocol version 4 (IPv4) is the most common protocol used by Internet connected devices. IPv4 addresses consist of 4 bytes worth of information, i.e., four dot-separated numbers each in the range of 0–255. This makes a total of 232 = 4,294,967,296 unique addresses on the Internet. For example, Yahoo’s server IPv4 address is 206.190.36.45.

When IPv4 was created, it was not known how many interconnected devices there would be. Despite the relatively large number of address, we have already exhausted our pool of IPv4 address, click here to learn about one solution.

Internet Protocol version 6 (IPv6) is the successor to IPv4. IPv6 uses longer addresses that support 7.9×1028 times as many addresses as IPv4! IPv6 addresses are made up of eight colon-separated groups of four hexadecimal digits per group, where leading zeroes in each group may be omitted for brevity. Yahoo’s server IPv6 address is 2001:4998:c:a06::2:4008

DDoS, denial of service, attacks have been well documented throughout internet history. The basic principles of the attack is flooding and overwhelming an online service by flooding it with traffic from multiple sources. It makes it impossible to stop the attack simply by blocking a single source as it comes from a range of different sources.

There are 2000 recorded attacks every day and the average price of an attack costs $150 on the black market. Furthermore a simple DDoS attack can be flooding a small server with emails from like petitioning websites where hundreds of petitioners sign and the email gets sent to the cause. Thus overwhelming the servers.

The first step in creating a DDoS attack is building capacities. Attackers often build huge networks of bot computers, this can be done through creating a virus and malicious software in emails, applications, torrents and social media. Once the device is infected, they are able to remotely control the device without the user’s knowledge to attack a specific online service. They essentially build up an army of computers and devices with many being millions strong.

The second step is to generate large amounts of traffic to overwhelm the target, this may be banks, news websites and email exchanges. This could be sending many requests from each device and also sending huge amounts of random data to the server to use up the servers bandwidth. The server cannot handle all this data and requests and then either freezes or shuts down.

Attackers often sell their services to people willing to DDoS attack a specific website or company, they are bought through the dark web and online marketplaces. A DDoS attack that can last a week long and can take a small organisation weeklong and cost as little as $150.

There are different classes of attacks which include;

TCP connection attacks

Volumetric attacks

Fragmentation attacks

Application attacks

Nowadays, these attacks can take down DNS servers, which halt internet productivity and internet services. A recent major attack had brought down large services like Spotify and Twitter. With attacks affecting DNS servers, the future of the internet is fragile with more and more bots being created, thus allowing for larger DDoS attacks.

Network address translation was created due to the exhaustion of IP address, Ipv4. Ipv4 is the standard for current day IP addresses, however it was created sometime around 1981. Back then they did not account for the millions of internet connected devices. Ipv4 is a series of 32 bits, which means there is a physical limitation of 2 to the power of 32 unique IP addresses. With the current growth rate, we would use up all these addresses with new smart phones, fridges and any internet connected device. Two major solutions were used to combat this, Ipv6 and NAT. Ipv6 allows us to have 2 to the power of 128 unique IP addresses.

With the limitations of IP addresses, network address translations were used to make better use of the limited addresses. To explain it simply, the router links up all the devices in your home into one public ip address. It is similar to an apartment building. To the outside world, they are one building, but once you go inside you see the different people who live there. The router is the apartment building and the people who live there are the internet devices connected to the router. This means, within the private network, each device is given a unique ip address. Instead of having 6 unique IP addresses, the NAT cuts it down to one. This limits the number of public IP addresses an organisation or household would use. Furthermore NAT’s act as an firewall, lets say you have a printer connected to your router. The NAT only allows private IP addresses access to the printer to ensure no random can print to your printer. This provides a security to the home user or business if they store their files on a NAS (network attached storage).

Now, lets say a computer request to visit bkmedia.co, the NAT see’s that this request is not for a device in the private network, the NAT then makes the exact same request using its own public IP address and delivers the response to the computer which requested the resource. This therefore means all your devices would have the same public IP address to an outside organisation.

NAT’s are very important, without them, security would be breached, we would run out of IP addresses and the internet would look a lot different.

Consumers today are met with a range of storage solutions for their technological device. However you may be wondering what they all mean? What are the advantages and the disadvantages of using different types of memory? Let’s find out.

Hard Disk Drives

HDD’s are the traditional format for storage, they offer large capacities at a relatively cheap price. Essentially it is an nonvolatile solution that contains a large magnetic coated spinning disk. There is a read/write arm that accesses the information stored on the disk while it spins. The advantage of HDD’s are that they are the cheapest storage solution per GB. HDD’s are known to last a long time (brand dependent) and certain brands are pushing the limits of these Hard drives by filling them up with helium producing 10TB hard drives. Laptops and Desktops commonly come with 1tb hard drives as consumers need larger storage solutions in an increasingly digital world. Unfortunately hard drives are limited in size, the laptop drives being 2.5 inches whereas the desktop drives being 3.5 inches. With laptops slimming down, hard drives are left to go into external storage and hard drives do use up more power compares to flash memory. Manufacturers now place hard drives in their lower tier models and use SSD’s to help slim down the body of the laptops.

Solid State Drives

Solid state drives have been out for a while but never really for the consumer market. It was only a couple years ago when they started to become the normal for consumers. Like HDD’s, SSD’s are a non-volatile solution (meaning they retain your data even with no power) where there are series of interconnected flash memory chips. Think of a multiple USB’s being attached together but are faster and more reliable. There are many different types of SSD’s on the market and the most common size is the 256GB models. Fortunately, SSD’s are becoming cheaper every day with the increasing advances in this technology. Common SSD’s are in a 2.5 inch factor, however recently smaller SSD’s have been produced like the mSATA Mini PCIe SSD card, M.2 SSD in SATA and PCIe variants. Seagate recently released a SSD with a 60tb capacity, however consumer variants go up to 4tb. SSD’s are much faster than hard drives as they do not have any moving parts, which also means SSD’s are hell of a lot more durable compared to HDD’s. Couple years ago, my mate dropped a basketball on a HDD (that was on carpet) by accident and then the HDD just died. However, SSD’s have a lower length in life due to the constant read and writes, but each generation is getter better at preserving life in the memory chips.

Overall

I would recommend having both. HDD for all your documents, videos and other unnecessary stuff and keep your operating software on the SSD. This ensures that your computer will boot fast aswell with applications on the SSD. However if you are to decide between an SSD and HDD on a laptop, get the SSD and buy an external hard disk drive.

Every website has a specific and unique IP address, however remembering each individual IP address can be a painful experience and a misprint of a number leads to a completely different website. Instead, we have domain names which provide a much more human-friendly approach, which maps a string of letters and numbers to a direct IP address.

For example, the popular social media website, Facebook, has a domain name www.facebook.com instead of its long IP address (66.220.144.0). No-one would want to use Facebook if it didn’t have a domain name.

The infrastructure that allows us to register these domain names to a specific IP address is through a DNS server. Your internet provider would have its own DNS where it can potentially filter out specific IP addresses such as torrenting websites.

Therefore, the DNS essentially works like a yellow pages or white pages. You type in the domain name, your browser connects to the DNS server which matches up the domain name with the correct IP address and then you are presented with the correct website.This all happens in the matter of milliseconds!

Australian internet providers, ISP’s, have blocked access to many different torrenting websites such as the pirate bay and kickass torrents. You may be wondering, how do i gain access to these websites? Well, there is a loophole, a major one. Currently, your internet would be coming from your internet provider’s DNS, let’s say Telstra. You are free to change your DNS to another companies, well probably a public DNS. Click here to learn more about DNS. A quick rundown of a DNS is that it essentially links the domain name to the correct IP address of the website you are wanting to visit. Now, the government has teamed up with Australian internet providers to block users from connecting to these IP addresses of the torrenting websites. However, as mentioned earlier you are able to bypass this by following these simple steps.

Bring up control panel

You can easily do this by pressing the windows key and typing “control panel”

Click onto Network and Internet -> Network and sharing center

On the left hand column select change adapter settings

Right click your adapter, wifi/internet/hotspot and select properties

Select Internet protocol version 4 (TCP/IPv4)

Select “Use the following DNS server addresses”

Input both 8.8.8.8 and 8.8.4.4

Click okay and you’re set!

Don’t worry, this DNS you are connected to is a public google server, many gamers often use this DNS to connect to online games. The worst google can do is collate the data and see which websites are more popular than others, or they could sell your information. Realistically in this day and age, your information has most likely been sold off to other companies and businesses. Anything you put onto the internet isn’t safe.

Samsung was eager to release their S8 after the note 7 debacle and they did not disappoint. Released in April 2017, the Samsung S8 has become the phone of the future, the benchmark for smartphone technology. Let’s take an in depth look at Samsung’s latest flagship.

Build Quality

The very first thing you notice about the phone is the screen, it has a whopping 83.6% screen to body ratio, making the phone feel like what we dreamt the future would be like a couple years ago. The screen is an super AMOLED display with amazing colours and brightness, something the iphone 7 lacks. The form factor is very similar to the S7, however the S8 has the screen size of the S7 edge. The resolution is a little out of whack and unusual, however now third party apps have adjusted to this unusual screen resolution and video’s make use of the crop to fit functionality. The overall build quality of the S8 is class leading with its smooth curved screen, glass front and back that seamlessly integrate into the metal side panels. It feels natural to hold in the hand and is very comfortable to use, Samsung really knocked it out of the park with this build. The corning gorilla glass 5 gives the user a sense of ease when dropped, knowing each generation of smartphones become more and more durable. That being said, a case would be recommended to be worn to preserve the beauty of the phone. The phone is also ip68 rated, which is extremely useful in the wet weather as well as taking underwater videos or photos. When applied with force, the phone barely bends which is always a positive. One thing that Samsung didn’t get right with the build is the fingerprint button placement, it’s shocking. I’m not sure who told the engineers to place it on the far side, but the flashlight and scanner should definitely be swapped. The reason I say this is due to the awkward one hand use as the finger stretches over to the other side whilst smudging the back camera. This isn’t a deal breaker but it definitely is something that you need to take time to get use to it. However, it makes sense when you use the phone with two hands. A possible solution for this could be integrating the fingerprint scanner onto the screen in the future.

4.7/5

Features

The Samsung S8 is filled with innovative features as well as some completely unnecessary features, I will touch on the ones I think are important. The curved edge for me is more for aesthetic however the edge panels are surprisingly helpful at time. You can customise the edge panels to display apps, people, reminders, weather, sport scores and finance. This can be helpful when you need to quickly check something. With the edge to edge display, Samsung had to introduce onscreen buttons. The buttons are remappable and now with the latest update, you can make the buttons disappear during applications which make the screen feel so much bigger. The S8 features Bluetooth version 5.0 which is leaps and bounds above version 4.0. The feature I personally enjoy the most is the ability to stream your music to two different Bluetooth speaker simultaneously to give a stereo experience. Click here to learn more about Bluetooth 5.0. Furthermore, the S8 has expandable memory and a headphone jack. Samsung has made the switch the USB type C ports, which is the current market trend and is really simple to plug in. A new feature Samsung has introduced is the Iris scanner which operates similar to windows hello where the infrared camera scans your eyes and surrounding face, if there is a match you unlock the phone. What is really useful is the ability to capture gifs, scroll captures screenshots and other clever bits with make the S8 more like what the note7 was meant to be. Also Bixby is shit.

4.5/5

Performance

The S8 is decked out with the latest specifications with the Qualcomm Snapdragon 835 for USA and China and the remaining countries with the Exynos 8895 Octa. Both are top of the line processors and the GPUs, Adreno 540, handle all the current smartphone applications like a walk in the part. The phone runs extremely smooth thanks to the inbuilt 4GB of ram as well as the 64GB internal storage. The phone has the same amount of ram as the everyday laptop. The phone performs extremely well, however it does get hot after an hour of strenuous use. The camera is relatively unchanged with its 12MP shooter at f/1.7. It easily can shoot 4K and has optical image stabilization for 1080p shooting. The secondary camera is an 8MP shooter that can shoot 1440p video. The samsung S8 camera is a slight improvement over the S7, however the google pixel and the HTC u11 reign ahead.

4.8/5

Battery Life

I consider the battery life to be the most important feature when buying a smartphone. With the increased screen size and resolution, the battery remains the same size as the S7. What? Yes, it’s the same size, but do not fret. From my usage of the phone, the battery life is better than the S7 but not the best. I am able to get a full day use out of the phone and just reach the 15% warning. There are two power saving modes that allow you to extend the battery life, however your notifications do get delayed and sometimes your messages do not get sent straight away. One thing that is positive is the quick charging and wireless charging. This allows you to charge the phone quickly and newer power banks are supporting quick charging both ways. In order to increase the battery life of the phone, remember to close all applications that are not being used, such as Facebook or Messenger and ensure to take your phone off the charger once it’s fully charged, which means avoiding overnight charging.

4/5

Complaints

This is the section where I like to highlight everything that isn’t good with the phone, let’s begin with Bixby. There is a complete dedicated button towards something the world doesn’t need, another smart assistant. I personally like to avoid using smart assistants however this time I unfortunately cannot avoid accidentally pressing the button. It is in such a poor placement and I activate the button far too often. What needs to happen is Samsung should allow users to remap the button to something they would like to open, let’s say the camera or the phone application, something that is useful. If anything, I would rather use google now than to use Bixby. The speakers on the S8 need improvement, the down firing speaker is getting really old now with competitors introducing stereo speakers which make use of the earpiece like in the HTC 10 and 11. The screen resolution is also very annoying when watching videos in 1080p as there are thick black bars to the side. The crop to fit functionality does take away certain aspects and can be annoying with hardcoded subtitles. Another complaint has to be the pricing, well this goes towards the entire industry. I’ll save this for another article, also Bixby is shit. The fingerprint scanner really needs to be reevaluated and perhaps making the phone a little thicker to allow a larger battery. I’m sure many consumers would prefer a slightly thicker phone and have an amazing battery life!

Overall thoughts

Samsung really nailed this phone, they did nearly everything right and deserve to make huge profits from this phone to invest in future improvements. It takes time for the consumers to adapt to changes such as the loss of the headphone jack and Samsung has made the smart move to leave to port until the market is ready to move. There are many improvements that can be made with this phone, it isn’t perfect, but Samsung really are becoming the market leaders and giving us the phone of the future. I purchased my S8 on an $84 Optus plan using the family and friends 20% discount, bringing the monthly payment to around $67. Make sure to search around for a deal on this phone and you will not regret.

This report can be used as a basis for an extended essay for the international baccalaureate.

Abstract

This report involves and analysis of the question “With Facebook’s recent acquisition of Instagram and Whats App to what extent may a horizontal integration with Twitter be an appropriate growth strategy?”

Facebook is globally one of the most well-known social networks being the market leader in social networking for several years. However like many other industry leaders, Facebook is facing a number of pressures for change. In order to avoid losing market share to competitors such as WeChat, QQ and Snapchat, Facebook must adopt relevant future growth strategies. Facebook has a history of external acquisition especially horizontal integration.

Due largely to Twitters falling stock prices and market position, the media has focussed on the possibility of Facebook acquiring Twitter.

This report focuses on a range of secondary sources to help analyse this question, comprising empirical research of similar acquisitions previously, a review of academic journals which look at this type of growth strategy and the analysis of both Facebooks and Twitters internal and external environments. Furthermore, access to shareholder report provided important financial data. Specific business techniques included; Porters’ Five Forces, a STEEPLE and Strengths and weaknesses analysis and a quantitative analysis of industry trends allowing a 4 period moving average.

The body of this report, contains an analysis and evaluation of this question using both quantitative and qualitative internal and external information.

The final section comprises a conclusion based on information discussed previously; this being that management does need to at least consider a possible acquisition by Facebook. Supporting reasons for this include may be a favourable financial position and previous success of this strategy, although some possible issues are identified. However the conclusion also states that further management action is required for a more detailed conclusion along with a recognition of certain limitation in this analysis.

Part one

“To be successful and remain in business, both profitability and growth are important and necessary for a company to survive and remain attractive to investors and analysts[1].”

This quote is especially relevant as businesses turn to globalisation as shareholders/investors look for an increase in returns even with increasing worldwide economic volatility[2]. Growth essentially relates to expanding a business’s operations through elements of internal and/or external growth[3]. Selecting the most appropriate growth strategy is pivotal, especially as the financial risk of investment increases[4].

As of February 2016, Facebook held a 43.9% share of the Social networking market[5], being the global leader.[6] Initially founded in 2004 by Mark Zuckerberg, Facebook was privately funded until 2012 when they held an IPO[7]. They currently rank 10th on Forbes’ most valuable brands[8]. Their growth is due to former acquisitions and internal growth; a combination of external and organic growth. Facebook has acquired 57 companies with the last acquisition on October 5th, 2015[9], indicating the significance of the strategy.

According to Ansoff, their growth strategy is focussed around a combination of market penetration, market development and product development; expanding their user community, offering new products/services whilst increasing current user engagement[10].

However like many other global businesses, they face numerous external pressures such as developing global technologies, economic volatility, which could affect their returns and funding for investments, and changing customer needs; such as improvements in privacy and accessibility[11]. Technology quickly becomes redundant through advancements in mobile phone capabilities, software/hardware upgrades and storage capabilities[12]. For Facebook, the increasing expansion from global competitors is a major operating pressure.[13] WeChat has emerged from China and has seen millions of users flocking to use their platform.[14] WeChat aims to penetrate South East Asia, which also happens to the market which Facebook is expanding into.[15]

As an example of their acquisition growth strategy, in late 2012, Facebook acquired Instagram who was a major competitor that specialised in instantaneous photo-sharing[16]. It was also a ‘eat or be eaten’ decision for Mark Zuckerberg, driven by rumours of Google and Microsoft lurking around.[17] At the time, the culture of Instagram was also considered to be very similar to Facebook as their vision was “To capture and share the world’s moments”[18].

This acquisition was a form of horizontal integration, which involves acquiring other businesses or services that are at the same stage of production in similar industries, as both Instagram and Facebook are social media networks[19].

Interestingly, Zuckerberg claimed that “This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all[20]” Ironically this has not been the case as discussed later.

Looking at quantitative data alone, Instagram surpassed 400 million[21] MAU (Monthly Active User) in 2015, beating the second largest social media company, Twitter, by 31% in active user base[22]. Their growth has been supported by popularity in foreign markets and teenagers as Instagram offers a greater sense of privacy[23]. Ultimately giving Instagram a worth of $US35b in early 2016 and is estimated to earn $US3.2b in revenue for 2016.[24] Therefore, Instagram has been one of the stronger driving factors regarding Facebooks recent growth.[25] Furthermore, suggesting that Instagram’s corporate culture and employee motivation has not been heavily affected[26].

As another example of this strategy, Facebook acquired WhatsApp in 2014 in a deal valued at $US19.6b[27]. WhatsApp is globally the most popular free mobile messaging app with over a billion MAU[28]. Although being criticized for overpaying for a free service, Facebook gained significant access to a large new global user base[29]. Furthermore, it allowed Facebook to eliminate competition in the market and reduced the chance for another competitor to acquire Whatsapp[30].

According to Zuckerberg, Whatsapp and Facebook had a similar philosophy regarding customer charges, demonstrating their similar vision[31]. During the acquisition, founder Jan Koum was known to help his team navigate the acquisition to ensure WhatsApp maintained its culture and independence, as was with the case with Instagram[32].

More recently and continuing into 2016, rumours have surfaced regarding possible businesses acquiring Twitter, another leading social network[33]. In that mix is Facebook, largely due to their financial capacity and a rival. This timing is vital with Twitter’s shares plummeting significantly throughout 2015.[34]

Whether this occurs would be an important issue for a number of reasons. The huge cost of $US12b could potentially have significant consequences on Facebook’s survival and represents two of the biggest market players combining[35]. It also represents a huge issue in that if Facebook is seen to be unsuccessful in any purchase or return on investment, it could have a detrimental impact on their brand image, challenging their market strength.

Therefore my question is “With Facebook’s recent acquisition of Instagram and Whats App to what extent may a horizontal integration with Twitter be an appropriate growth strategy?” To explore this question, the focus is largely from Facebooks perspective. The following analysis considers a range of internal and external factors using relevant business analytical tools. In the context of “to what extent” the analysis looks at the possible financial implications in terms of market share and profitability together with a more cultural perspective in terms of vision, synergy, employees and management.

Part two

To tackle this report, I based my findings on secondary research through a combination of web based, academic sources/journals and the companies’ respective shareholders reports. Most sources came from within the last 4 years which covers Facebooks acquisition of Instagram in 2012.

Search engines such as Google and JSTOR combined with the ProQuest database, provided the focus of the research and sourced a range of both qualitative and quantitative data.

A range of business tools and techniques were used in the analysis such as a strength and weakness analysis, Porter’s 5 forces, trend analysis based on financial data, the Ansoff matrix and a STEEPLE analysis specifically for external related issues.

There are limitations within this report which do restrict a more comprehensive analysis. These limitations include unavailability of a key data base, privacy restrictions particularly relating to a lack of financial information. Where possible, largely objective sources were used, however some opinion pieces helped to give a range of views and contrast on specific situations. The challenge was to ensure that the information was valid when some sites had conflicting information.

Part three

To provide a more academic discussion behind this form of growth, J. Dunbar claims that acquisitions have become a common form of growth in a world fuelled by organisations fixated on growth[36]. Reasons include the intended synergy of the new structure and the increase in market share, market power and larger customer base[37]. Not only this, it is seen as a quicker method of growth especially in terms of protecting the survival of a business in a more competitive market[38]. Specifically, in the tech industry, horizontal integrations are becoming increasing popular according to Vossoughi in the Harvard business review[39]. Larger businesses may want a product/service another business has to offer, if the target business lacks funding to grow and develop what they offer, they often end up acquired[40]. This type of integration may equate to larger market share and greater market power/dominance[41].

However, acquisitions have major drawbacks such as redundancies, conflict and loss of control. Rina Steynberg claims “A culture clash between the integrating organisations is consistently cited as one of the top ten reasons for M&A failure”[42]. Potential disagreements arise from possible Job losses due to savings or repeat jobs and management teams may feel a loss of control when restructuring. Veldsman and Steynberg claim people integration drive acquisition failures.[43] The culture clash is often due to an unshared common vision and/or leadership style, meaning those co-ordinating the acquisition often overlook people integration[44]. Steynberg claimed “M&A failure results in the closing down of organisations…….. People… and the wider community… shareholders, are impacted.”[45] Communication and form also drive acquisition failures, communication between management and employees. These issues all affect the success of an acquisition[46].

Lynn Jekkals, managing director at Aon Risk Solutions claims: “(businesses) were buying companies out of bankruptcy and really bought troubled companies that weren’t making it through the tough times,”[47] Suggesting that acquiring a dying company may be high risk.

A recent Harvard Business report suggests that the acquisition failure rate sits between 70% and 90%. This extremely high figure assures this method of growth is high risk[48].

However, despite the above “criticisms”, the number of acquisitions are on the increase. Deloitte conducted a survey in which they collected data from 2,500 US executives from both companies and private equity firms in April 2014[49]. Staggeringly 84% of respondents are expecting to maintain or increase their acquisition activity over the following two years. Furthermore, 60% of the respondents forecast to acquire targets in foreign market, diversifying their customer base[50].

Any analysis of this strategy includes looking at their past record of acquisitions, but also needs to involve a study of, where possible, similarly positioned businesses. Certainly research reveals a number of both successes and failures.

In 2014, Microsoft bought Nokia for $US7.6b[51]. Nokia was once the market leader in the mobile phone market peaking at 62.5% market share, but fierce competition drove its share down to 3% (2016)[52]. According to Robert Cringley, the motive behind this acquisition was for Microsoft “to compete better with Android and iOS (as major competitors) & also to take full control of its smartphone destiny.” However, “It was a mistake to begin with,” claimed Jack Gold, principal analyst at J. Gold Associates[53]. It was deemed a failure in 2015 where Nokia had struggled to regain lost market share and is Microsoft’s biggest write off, cutting 7,800 jobs with 18,000 cut the year before[54]. Frank Gillett, an analyst with Forrester Research claimed that “It’s the last disappointment of the previous generation of Microsoft’s leadership,”[55] This shows how different the leadership styles were as well as cultures, considering both companies were founded in different countries[56].

Equally, the horizontal integration and takeover of Mojang in 2014, a company producing computer games, by Microsoft has been seen as a relative success[57]. This has opened Microsoft to a new younger demographic and when combined with their existing products, saw a significant increase in sales. Subsequently under Microsoft, Mojang is selling 10,000 games a day[58]. Matt Booty explained. “These two things can come together at their best to deliver an amazing game with forward-looking technology that required deep resources to build…..It highlights how these two companies can come together and build something that didn’t exist before.[59]” This success is due to their similar visions.

Part four

The analysis which follows needs to take into account the current growth, opportunities, the relative position and financial capabilities of Facebook to maintain this strategy in the social networking market. Utilising the Boston matrix[60], Facebook is in a high growth market and has a high market share.

31% of the world’s population use social media which is 2% from last year[61]. Furthermore 1.97 Billion people access their social media through mobile, again a significant increase over the 1.65 Billion in 2014/15[62].

Facebook

As previously stated, Facebook is the social network market leader with 43.9%, whereas Twitter has 5%[63]. (Figure 1)

Figure 1: Leading social media websites in the United States in February 2016, based on share of visits.

Facebooks strong market position and growth can also be seen from looking at the constant increase in monthly active users (figure 2). In figure 2 as of ‘Q4 2015, Facebook had 1,591 million active users, a growth of 14.21%; ‘Q4 2014 being 1,393 million active users.[64]

Figure 3 highlights this trend using a four period moving average of their quarterly data base which demonstrates their consistent increase.

Year

Period

Users (Millions)

4 period moving average

Centering

Variation

Q1 2010

1

431

Q2 2010

2

482

517.75

Q3 2010

3

550

580

548.875

1.125

Q4 2010

4

608

644.25

612.125

-4.125

Q1 2011

5

680

706.75

675.5

4.5

Q2 2011

6

739

766

736.375

2.625

Q3 2011

7

800

821.25

793.625

6.375

Q4 2011

8

845

875.25

848.25

-3.25

Q1 2012

9

901

927

901.125

-0.125

Q2 2012

10

955

979.75

953.375

1.625

Q3 2012

11

1,007

1032

1005.875

1.125

Q4 2012

12

1,056

1072

1052

4

Q1 2013

13

1,110

1117.5

1094.75

15.25

Q2 2013

14

1,115

1160.5

1139

-24

Q3 2013

15

1,189

1202

1181.25

7.75

Q4 2013

16

1,228

1252.5

1227.25

0.75

Q1 2014

17

1,276

1292.75

1272.625

3.375

Q2 2014

18

1,317

1334

1313.375

3.625

Q3 2014

19

1,350

1375.25

1354.625

-4.625

Q4 2014

20

1,393

1418.5

1396.875

-3.875

Q1 2015

21

1,441

1467.25

1442.875

-1.875

Q2 2015

22

1,490

1516.75

1492

-2

Q3 2015

23

1,545

1570

1543.375

1.625

Q4 2015

24

1,591

Q1 2016

25

1,654

Figure 3: Four year moving average on Facebook’s quarterly user base[66].

Figure 4: Facebook’s revenue and net income from 2007 to 2015 (in million U.S. dollars)[67]

Facebook’s worldwide growth has also generated a large increase in revenue almost exponentially over recent years (Figure 4), (43.79% increase from 2014 to 2015). Figure 5 also highlights this through a trend analysis using moving averages. Referring to their shareholder report (Appendix 1&2) [68], their long-term debts situation has also improved markedly. (2013 – $1.5 billion / 2015 – $0). Possibly indicating the necessary financial stability to acquire Twitter.

Year

Period

Revenue (Millions)

4 year moving average

Centering

Variation

2007

1

153

2008

2

272

794

2009

3

777

1683.5

1238.75

-461.75

2010

4

1974

2887.75

2285.625

-311.625

2011

5

3711

4661.5

3774.625

-63.625

2012

6

5089

7284.5

5973

-884

2013

7

7872

10681.25

8982.875

-1110.875

2014

8

12466

2015

9

17298

Figure 5: Facebook’s revenue four year moving average based on Figure 3

Other sources also emphasis the power of Facebook[69] . Around 62% of Americas get their news off social media sites, were Facebook holds responsibility for 44% of that[70].

Twitter

Twitter has had very stagnant growth over the last few years with very minimal user growth, suggesting the company has reached saturation.

Twitter’s revenue surprisingly increased 62% between Q2’ 2014 to Q2’ 2015, annual revenue for 2015 being $US2.2b. However investors were not confident after Twitters shares plummeted over 2015[75]. In 2015, the stock price traded at $52.87 at its April peak fell to $22.47 dollars in August. Furthermore, in 2016, fell to a staggering $14.01 in May[76].

Part five

An effective analysis needs to focus heavily on Facebook’s previous history with their acquisitions strategy with a range of current and possible internal and external factors. This needs to also draw upon aspects of Twitters operating environment.

The previous chapter indicates Facebook’s relative growth hence why Facebook is regarded by many analysts to be one of the likely companies to acquire Twitter.

Current strength and weaknesses

Strengths

As stated, the acquisition cost of Twitter will be approximately $US12b[78]. In 2015 Facebooks financial reports (Appendix 1&2) revealed $US18b revenue, approx. $US4b net profit, $US22b of current assets and only $US5b in total liabilities. Facebook has $US44b in shareholders equity and no long term debt[79]. These reports have shown financial stability in recent years and may indicate a financial capacity to acquire[80]. (Table 1)

Another strength of Facebook is undoubtedly their success in using this strategy in the past with Whatsapp and Instagram being referred to previously[81]. (Table 1)

As of February 2016, Facebook already has a market share of 45.5% including Instagram[82], Indicating significant market leadership. Acquiring Twitter could create a staggering 50.5% of the US market share. (Table 1)

Additionally within the industry, Facebook is seen to have a very strong and innovative culture, enabling them to take on more products. Harry McCracken described Facebooks culture as, “fabulously successful working environment that Zuckerberg devised in the early years”[83]. (Table 1)

Weaknesses

There is some suggestion that there may be an element of saturation in this market (Eldon, “Facebook Started Saturating the US Market In 2011”[84]), especially with new competitors. Figure 2 previously does suggest a slowing in rate of growth. (Table 1). Integrating Twitter’s algorithm into Facebook could possibly be a solution. However, it may be more viable to acquire a start-up that has a much larger potential compared to company who has not seen growth nor large amounts of profiting years (Twitter).[85]

Furthermore around 80% of Facebooks revenues come from advertisements on its social network[86]. However, the revenue is dependent on the growth of users which eventually, may hit saturation in certain markets[87]. Therefore Facebook may rely too heavily on one revenue stream which is subject to change with new competitors emerging in the market. (Table 1)

Table 1: Strengths and Weaknesses of Facebook

Strengths

1. Financially, large Increase in revenue streams and market share[88].

Porters’ Five Forces analysis is another useful tool to also help analyse the possible acquisition by assessing its competitive position.

Porters Five Forces

Threat of new entrants

The social networking is open to new competitors as the market is deregulated (e.g. see figure 1). Hence Facebook continually faces new entrance[95].

Threat of Substitution

With the increase in the range of competitor’s service in the market, many consumers have started to use multiple social networks. This is a major threat to Facebook especially with international social networks such as WeChat and QQ whom grow at faster rates[96].

Supplier Power

In this element, Facebook holds a strong position as they own servers[97].

Buying Power

Consumers having more choice through developments in technology, advertising and changing needs leads to high customer power.

Rivalry among existing competitors

Even though Facebook has acquired some of its competitors such as Whatsapp and watched competition fail such as Myspace, there is still significant rivalry particular in terms of Google +, Snapchat and WeChat[98].

General conclusion

So even though Facebook is the market leader, using this technique does suggest that increasingly they are in a more competitive market that does require innovative strategies that will retain or grow their user base as well as revenue streams[99].

A steeple analysis also provides a number of external considerations as to whether this acquisition should take place.

STEEPLE

Table 2: Steeple analysis

Opportunities

Threats

Political

· The further opening up of US’ connections with other countries can provide further market development (Ansoff).

· Uncertainty of the upcoming US presidential election may impact on investor confidence[100].

· Regulations in China can impact on the global success especially with Chinas fast growing market[101].

Economic

· The forecasted growth of the US Economy may provide further advertising revenue to help fund this acquisition of Twitter, may provide investor confidence. (Refer to Figure 11)

· The threat is that if the market remains volatile with less growth than predicted than the acquisition may not be as successful.

Social

· Customers who use both or just one can integrate together which helps their mission statement of bringing everyone together.

· Facebook is seen to even gain more powerful which could be a public concern.

· Acquisition doesn’t provide the consumer with significantly different services.

Technological

· Use of global technological advancements to help their applications and synergy of the systems.

· Facebook able to patent twitters systems and devices, therefore protecting intellectual property and restricting other business usage.

· US antitrust law prohibits any acquisition or merger that would have the tendency to lessen competition or create a monopoly.

Environmental

And Ethical

· With an increase in public and media focus on businesses being socially responsible, Facebook can benefit Twitters recognised stance

· Possible community backlash through possible redundancies.

· Media’s portrayal of this acquisition may affect brand image.

Other considerations

A strength already discussed is Facebooks seemingly strong financial position, (high revenue low debt), which could cover the $12b cost, especially given it would only be a two thirds the price of the Whatsapp acquisition. Furthermore, they do have past success in this strategy, however with concerns about the volatility of the economy, perhaps there is greater risk in the timing of this strategy. Also, as identified previously, the potential acquisition may have consequences on their brand image, from the perspective of an increase in market power and negative ethical issues[103].

Even if the financial side was viable, the STEEPLE analysis previously did identify US antitrust law prohibiting any acquisition or merger that would have the tendency to lessen competition or create a monopoly[104]. Also a pre-acquisition notification must be filed with the US Department of Justice and the FTC (Federal Trade Commission)[105]. Considering the size of this acquisition, it could take time before it passes through, thus tying possible funds.

Certainly a big consideration would be whether the leadership styles of both Facebook and Twitter and culture are compatible. From evidence, they seem to be a similar, however there needs to be more research from management to see if the cultures are compatible[106]. From past examples, Whatsapp and Facebook had similar visions and integrated with synergy.

Zuckerberg (CEO of Facebook) has shown an appetite to acquire other businesses despite at times saying things on the contrary after the acquisition of Instagram. Showing Zuckerberg’s immaculate leadership and management skills to create these successes.

A big consideration is the possible impact directly on the staff of Twitter and also on the possible job security of existing loyal staff at Facebook. Whatsapp had only 55 employees when acquired, leading to a seamless transition. As of December 2015, Twitter had 3,900 staff located around the world[107]. Integrating 3,900 employees situated around the world takes time. This highlights how there will be issues regarding staff that work as management in software, technicians, marketing and accountants as these areas appear as jobs with similar functions in both organisations. If Twitter was left as subsidiary, at least in the short term, then job losses may not be limited.

As previously discussed, the anticipated future growth of the US economy is estimated to be around 2-3%. Kimberley Amadeo, an US economy expert, claims that this is ideal growth rate that is sustainable in the future, again making this a good time for the acquisition[108]. However, if this growth did not occur, any slowdown may reduce the advertising revenue streams which Facebook heavily relies on (Table 1), ultimately negatively impacting their position on acquiring twitter. Furthermore if the market is reaching saturation as discussed previously, the risk involved could also increase. Given that Twitter uses essentially the same revenue streams, the acquisition perhaps would not help Facebooks revenue sources.

A further argument is that Twitter possibly provides what Facebook needs. This is the area of having a strong mobile base whereby consumers have real up to date information of world events. This is supported by a global survey conducted by the organisation “we are social”. This may allow Facebook to more actively confront their rivals which do this effectively such as Snapchat and WeChat[109]. There is a definite threat towards Facebook as international competition grows at an increasing rate, such as WeChat. Even though Facebook is still clearly the market leader, it cannot afford to wait for this position to be lost or challenged.

Interestingly, Kara Swisher at Re/Code, paints Facebook as a Disney-like media giant[113], and actually feels that Facebook may be better off developing their own twitter like[114] service, which may come at a lower cost. However, Charlotte lee highlights Facebooks failures[115] in attempting to build their own mirror like services, suggesting it may be better to acquire than to waste time and resources to “re-engineer” an already performing product[116]. However, this claim requires more research.

Furthermore the timing might be right for the acquisition especially after the rumours about News Corp acquiring twitter which sent Twitters share prices soaring up until the rumours were disproven, sending the prices back down[117]. If Facebook did acquire Twitter, this could impact their share prices positively. Furthermore Facebook having access to Twitters user data gives Facebook the ability to directly target their advertisements.

Another possible strength of any acquisition is the similarity of target markets according to figure 16. [118] This shows that for both business their primary target market is of the ages of 30-49, possibly their general marketing focus may be similar already.

Part six

In conclusion, this analysis suggests that it would in the management of Facebooks best interests to at least consider the possibility of an acquisition of Twitter as a growth strategy. This is accentuated by the evidence that has been collected suggesting that the global social networking market has become increasingly competitive and if Facebook desires to stay as market leader, it is required for them to grow.

All sources suggest any business must continually change and adapt to the consumer’s needs; without adaptation, they will not survive. It may not be Twitter, but Facebook may be well positioned to acquire another business.

Previous analysis has identified many possible favourable conditions in favour of an acquisition at this point in time, this includes a steady increase in revenue, stable financial position[120], excellent innovative culture and strong leadership and management teams. Facebook has a proven history with acquisitions, certainly have shown they can plan and adopt successful strategies. However, there are some issues for management to consider further, this includes the consideration of the possible impact of the upcoming US presidential election on the US economic stability, investor confidence, US antitrust laws and community backlash.

A more detailed analysis is required due to imitation such as confidentiality issues regarding financial information relating to both Twitter and Facebook, potential subjectivity of some secondary sources, time and word constraints, and lack of access to primary sources. Also management must consider this question on a more global perspective as this essay focuses primarily from a US perspective. Furthermore there is a need for much more detailed research on the cultural compatibility on both Twitter and Facebook. As such, no definitive statement can be reached in this report about the suitability of any acquisition until more detailed research is undertaken.

Why the Largest Social Network in 2015 Won’t be Facebook, a. and Why the Largest Social Network in 2015 Won’t be Facebook, a. (2016). Why the Largest Social Network in 2015 Won’t be Facebook, [Accessed 13 Mar. 2016]

Currently at the typing of this article, I have less than a fortnight to pick a new phone plan with Vodafone. Now, when I was younger I couldn’t handle a 24 month plan, this would be the first time I would reach the complete 24 months. Somewhere along the two years, Vodafone removed the option to change phone plans with 2 months remaining, meaning that you were stuck in your contract for the full 24 months. Upon browsing through their phone plans, I noticed that their phone plans appear to be getting absurdly overpriced. Is this true? Let me explain:

Two years ago, I purchase a Samsung Galaxy s6 at a price of $60 a month on their red plans with the phone included, this was around 1-2 months after the release of the s6. Included the phone plan was the typical infinite calls and text as well as 3.5gb of data, the 0.5gb being a free offer.

Last year, A family member purchased a Samsung Galaxy s7 for $70 a month on their red plans with the phone included, now this was yet again 1-2 months after the release of the s7. The plan included the typical stuff but the data had increased to 7.0gb of data, 1.0gb

Now, there are no currently offered phone plans that include the phone, s8, with the plan, the closest plan I could find is a $90 plan, which is an $80 red plan along with $10 for the handset payment. Now you still get the typical stuff but the data has increased yet again, to 13.0 gb of data, this is with 5.0gb of free bonus data offered in a promotional.

This had me thinking, phone companies are always pushing consumers to opt for more expensive plans with all their “bonus” inclusions into the plans, enticing the consumer to opt for the more expensive plan. Once they reach a solid amount of customers on a more expensive plan, it is only sensible to then push up the phone plans to make whatever was pushed to become the norm in phone pricing.

Current Day offerings

$60 Red Plan

$70 Red Plan

$80 Red Plan

Handset fees s8

$26

$18

$10

Data

3.0gb

6.0gb

8.0gb

“Bonus Data”

0.0gb

4.0gb

5.0gb

Total Data

3.0gb

10.0gb

13.0gb

24 month payment

$2,064

$2,112

$2,160

From this table above, we can definitely see the push for consumers to opt for the higher phone contract option, with only less than $100 difference overall between the $80 dollar phone plan and the $60 dollar phone plan.

However, we must factor in the different RRP of each Samsung flagship, perhaps the increase in phone prices have affected the phone pricings.

Phone

Size

RRP

Samsung Galaxy s6

64 GB

$1,149

Samsung Galaxy s7

32 GB

$1,149

Samsung Galaxy s8

64 GB

$1,199

No, not really. Phone pricing has been really stable over the last three years, however 4 to 5 years ago we saw a huge jump in pricing, not looking at anyone (apple). If the handsets aren’t changing too much in pricing, then what are we paying for?

Data.

Data Add ons

$15

$30

$50

Amount of Data

2.0 GB

5.0GB

10.0GB

The table above shows the current cost of data add on’s and the amount of data the consumer should expect to receive, they are shocking. The entire premise of paying add on’s each month is to receive more data, this is hardly justifiable. What strikes me is the lack of data offering with the $50 dollar plan, 10GB… These data add on’s aren’t meant for the consumer to buy, these are only there to justify the increase in phone contract pricing with the handset. Which too be fair, $10 for an increase in 6GB of data is justifiable in my opinion, but this won’t appeal to most consumers.

The only changes in the phone plans has been data, Vodafone customers once received benefits such as free spotify premium in 2014, which ended on the 7th of December 2016 along with Stan or the Sydney morning herald/The age. How does vodafone expect to maintain their customer base when other telcos are offering cheaper plans and an extensive entertainment bundle. Telstra and optus both reward their customers, what are vodafone exactly offering?

Things you don’t need or things you cannot receive.

For an ordinary consumer, how do they justify the extra $20 a month after their contract ends, an added extra $480 over 24 months. Phone plans add to the continual scary growth of the cost of living in Australia.

Within time, we will see the S8 be able with $0 upfront only on the $80 red plan, each year being a $10 increase in their deals.

Verdict

In my perspective, Vodafone needs to throw in more and more entertainment deals to justify the increases in pricing. Bring back the spotify premium or strike a deal with Netflix so your customers either can have free few months of netflix or free streaming of Netflix. Moreover, Vodafone needs to maintain its customer loyalty with the emergence of cheaper telcos whom offer much more at a cheaper price, credits to Woolworths mobile with their amazing deals on the samsung s8 where they offered a similar plan to vodafone at ¾ of the price!

For consumers who chew through data, these phone plans are suited for you and are not absurdly priced. They offer more than enough data with each plan and will truly keep you going whether you be out and about or stuck with some shitty home internet. These data plans will definitely keep you satisfied and will justify the increase in prices.

On the other hand, consumers who do not use 13GB a month and only use around 2 – 3 GB a month, you are looking at a wastage of around 10GB. With compression becoming smarter and faster, less data is constantly being used, thus, you may be thinking these plans are absurdly priced. There are a few options however, that will better tailor your needs.

Buying the phone outright and getting a sim only plan with vodafone.

Buying the phone outright and getting a sim only plan with cheaper carriers.

Change carriers to carriers such as Woolworths (whom offer phones).

For the sake of it, let’s look into option one.

Samsung S8 price at Jb Hi-fi: $1,199

Kogan sim only : $36.90

Vodafone sim only plan equivalent: $40 / $36 with student discount

Optus sim only plan equivalent: $40 / $36 with student discount

Total: $2,159/2,063

There are very minimal savings here, however if you find a plan that suits your needs, you should be looking at a saving from anywhere between $1 to $400. Therefore If you do not need the extra data, there are cheaper ways.